Refinancing Mortgages

2007-03-08 10:33:40

( Financial )



THE WOES OF DEBT
It was the home of your dreams, so you bought it. The loan had a 30-years-term, and required a mortgage on your house. The interest rate seemed reasonable, and after all, the home of your dreams is worth working for. However, unpredicted financial reverses came your way, and now you find yourself staring at two months of unpaid amortizations. It may be time to refinance your mortgage.

WHY SHOULD I REFINANCE MY MORTAGE?
Sometimes, in the middle of paying the loan on your house, financial reverses stagger your ability to keep up with monthly dues. If this happens, consider the option of refinancing your mortgage. When you refinance your mortgage, a financial company agrees to settle your liability with your original bank. Your new contract will be with the refinancing company. Your original loan will be settled between the bank and the company. This benefits the bank, as they are assured of prompt repayment; this also benefits the company refinancing your mortgage because they will have new business in the form of your new loan. Finally, you will benefit from either a lower interest, or a lower monthly payment, based on a smaller principal.

ARE THERE MANY COMPANIES WILLING TO HELP ME REFINANCE MY MORTGAGE?
Companies involved in refinancing mortgages now number in the thousands. You can easily find them online by typing keywords such as "refinancing mortgages," or simply the word refinancing.

MORTGAGE REFINANCE RATES
Companies involved in refinancing mortgages will always offer rates lower than the original loan. Online, the quick quote calculators have a basic interest rate of 7 percent.

SHOULD I REFINANCE MY MORTGAGE?
Companies refinancing mortgages usually set a term of payment equal to the original loan. If your loan had a 30-years-term, then the refinancing mortgage will probably be for an equal period. This means that you will be in debt for an additional 30 years. This is not a happy thought if you are on your 20th year of payment. However, if the burden of paying the amortizations is so high, then refinancing your mortgage may be your best hope of alleviating your burden.


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